Digital contracts for Europe

We have all experienced this before: downloading music that would not play on our device, or buying software that suddenly stops working. Digital content products include videos, music clips, software or live sport events sold online. Buying these products online can be quicker and cheaper for the consumer, but if the product is not working, people are often not aware of their rights.

To solve these problems the Commission adopted two important proposals – one on contract rules on the supply of digital content (e.g. streaming music) and one on contract rules on the online sale of good (e.g. buying a camera online). These proposals will provide the same set of rules in all 28 Member States.

Digital Content

There are no EU-wide rules for faulty digital content. Some Member States have already started designing their own legislation. We should avoid having 28 different sets of rules for digital content sold online. Instead, harmonised rules for digital content products will reduce the costs for traders and encourage them to expand cross-border. Consumers will know what they can expect when they buy digital content online, and that they have rights if the product is faulty. This will inspire consumers' trust in e-commerce. Businesses will no longer need to deal with contract law differences in each Member State they wish to sell to.

People do not buy from websites in other countries because they do not trust that it will work. At least 70 million consumers have experienced one or more problems with just four popular types of digital content (music, anti-virus, games and cloud storage) over the last 12 months. However, only 10% of consumers experiencing problems received remedies. As a result of those unresolved problems, consumers in the EU have suffered a financial and non-financial detriment estimated in the range of €9-11 billion.

Traders do not sell because they are put off by the legal complexity: contracts for supplying digital content are categorised differently from one Member State to another: as sales contracts, services contracts or rental contracts. As a consequence, the remedies for consumers vary between Member States.

Goods

For selling goods online there are also legal differences between Member States, which keep businesses and consumers from selling and buying cross-border. These differences include consumer rights when goods are defective. As a result, businesses have to spend time and money to find out about foreign consumer contract laws when selling cross-border and to adapt contracts accordingly. Many of consumers' top concerns about buying online are about contract rights: not receiving their order, getting a wrong or damaged product or getting a faulty product repaired or replaced.

The figures say it all. Only 15% of EU consumers buy online from other EU countries, while almost three times as many (44%) buy online in their own country. Only 12% of EU retailers sell online to consumers in other EU countries, while more than three times as many (37%) sell online in their own country.

For a real Digital Single Market to take root, these legal differences must go. A single set of rules would bring legal certainty and thus help businesses expand their activities to foreign markets while giving consumers trust to embrace the benefits of the Digital Single Market. Harmonised rules will increase consumer trust in the Digital Single Market by providing a high level of consumer protection. It will also ensure a broader choice at more competitive prices for consumers. At the same time it will create a friendly environment for businesses and contribute to increase the volume of cross-border trade. For businesses, simplification of the legal framework is a key prerequisite for their competitiveness and active participation in digital markets.

As a result of removing contract law-related obstacles, it is estimated that:

At least 122 000 more businesses will start selling online to other EU countries;

Between 8 and 13 million additional consumers will start buying online from other EU countries;

EU GDP will increase by EUR 4 billion from its current level;

Increased competition will drive consumer prices down throughout the EU. This will lead to additional consumer welfare and is estimated to increase household consumption in the EU by EUR 18 billion from its current level.